Ameriprise, LPL go to FINRA arbitration in recruit dispute

Ameriprise and LPL Financial have agreed to bring in a third-party forensic company to help preserve evidence in a wide-ranging recruiting dispute while they await a resolution from a FINRA arbitration panel.

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In a judicial order approved Friday in federal district court in southern California, the two rival firms agreed to bring in a third-party firm to preserve any customer information LPL may have obtained by recruiting Ameriprise advisors. The order states that questions over the ultimate ownership of this data, and any legal damages arising from LPL’s possession of it, will be decided by an arbitration panel provided by the Financial Industry Regulatory Authority.

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Ameriprise sued LPL in July, accusing its rival of a “widespread pattern and practice of harvesting and misappropriating Ameriprise’s private, confidential client information and trade secrets.” Ameriprise accused LPL of using a “bulk upload tool” from 2018 to the start of 2022 to transfer customer data, including social security numbers, account numbers, account information, routing numbers, client dates of birth, client ID numbers, account values and securities values.

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Some of the information was for people who ultimately became LPL clients while some was for clients who remained with Ameriprise. Friday’s order says a third-party company will now be responsible for finding client information on LPL advisors’ personal devices and other data repositories and making “forensic copies” of it. The consultant will then erase the advisors’ copies of the data.

An Ameriprise spokesperson called the order “a victory for clients and our industry.” 

We’re pleased the judge recognized LPL’s ongoing practice of misusing private, confidential client information while recruiting advisors,” according to the spokesperson. “Importantly, LPL has been called to account for violating multiple securities laws and regulations, as well as the industry standards for broker recruiting. We will continue to pursue our case on its merits in the ongoing FINRA arbitration given the strength of the facts.”